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Buying a used car: payment options

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You have two choices: pay in full or finance over time. If you finance, the total cost of the car increases. That's because you're also paying for the cost of credit, which includes interest and other loan costs. You'll also have to consider how much you can put down, your monthly payment, the length of the loan and the annual percentage rate (APR). Keep in mind that APRs are usually higher, and loan periods are generally shorter on used cars than on new ones.


Dealers and lenders offer a variety of loan terms and payment schedules. Shop around, compare offers and negotiate the best deal you can. Be cautious about advertisements offering financing to first-time buyers or people with bad credit. These offers often require a big down payment and a high APR. If you agree to financing that carries a high APR, you may be taking a big risk. If you decide to sell the car before the loan expires, the amount you receive from the sale may be far less than the amount you need to pay off the loan. If the car is repossessed or declared a total loss because of an accident, you may be obligated to pay a considerable amount to repay the loan — even after the proceeds from the sale of the car or the insurance payment have been deducted. If your budget is tight, you may want to consider paying cash for a less-expensive car than you first had in mind.

If you decide to finance, make sure you understand the following aspects of the loan agreement before you sign any documents:

  • The exact price you're paying for the vehicle;
  • The amount you're financing;
  • The finance charge (the dollar amount the credit will cost you);
  • The APR (a measure of the cost of credit, expressed as a yearly rate);
  • The number and amount of payments; and
  • The total sales price (the sum of the monthly payments plus the down payment).

Used with permission. © 2015 Walmart. All Rights Reserved. See full legal.

Used with permission. © 2014 Walmart. All Rights Reserved. See full legal.

 

Important Walmart Disclaimer: Proper service and repair procedures are vital to the safe, reliable operation of all motor vehicles as well as the personal safety of those performing the repairs and those riding in the motor vehicles. Standard safety procedures and precautions (including use of safety goggles and other safety equipment, proper tools and equipment) should be followed at all times to limit the possibility of personal injury or improper service which could damage the vehicle or compromise its safety.  Personal injury could result from the failure to take adequate safety precautions when repairing or maintaining your vehicle.  Although this material has been prepared with the intent to provide reliable information, no warranty or representation (express or implied), including the warranties of merchantability and fitness for a particular purpose, is made as to its accuracy or completeness. Neither is any liability assumed for loss or damage of any kind resulting from reliance on this material and Wal-Mart shall not be liable for any loss or damage of any kind resulting from reliance on this material.  Users employ the information contained in this material at their own risk.  This material is provided only as a helpful guide and does not replace the information and instructions contained in the motor vehicle's owner's manual and product manufacturer's recommendations.  Users are cautioned to consult the motor vehicle's owner's manual and product manufacturer's recommendations for additional information and instructions.   Failure to follow the motor vehicle's owner's manual and the product manufacturer's recommendations could result in damage to your vehicle or personal injury.  Additionally, users should be aware of the applicable laws of their local jurisdiction.

 

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